28 Jan 2009

Britain unveils car industry aid

6:57 am on 28 January 2009

Britain has announced a package aimed at supporting its struggling car industry during the economic crisis.

The government will guarantee up to 2.3 billion pounds of loans to help the industry cope with a slump in demand due to the credit crunch.

Business Secretary Peter Mandelson said Britain had some of the world's most productive car plants and the government was not offering a blank cheque or operating subsidies.

Prime Minister Gordon Brown's spokesman said earlier that the British package would use funds set aside in November's pre-Budget report for specific sector interventions.

A number of European countries are considering measures to help car industries after the effects of the credit crunch and a global downturn stalled demand.

Italy's government is holding talks with manufacturers on Wednesday to discuss possible measures, while France is looking at a 6 billion euro aid package.

In Germany the industry's outlook appears brighter after government plans to issue certificates worth 2,500 euros for all new car buyers who scrap vehicles which are at least nine years old resulted in a flood of buyers entering showrooms.

The US government is being pushed to provide more help to produce fuel efficient cars. It gave $US17 billion in December to bail out General Motors Corp and Chrysler.